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South Africa's President Jacob Zuma arrives with Speaker of Parliament Baleka Mbete to give his State of the Nation address at the opening session of Parliament in Cape Town on Thursday. (Rodger Bosch/Pool/REUTERS)
South Africa's President Jacob Zuma arrives with Speaker of Parliament Baleka Mbete to give his State of the Nation address at the opening session of Parliament in Cape Town on Thursday. (Rodger Bosch/Pool/REUTERS)

Jacob Zuma announces sweeping reforms for South Africa Add to ...

Mired in his worst political and economic crisis since winning power in 2009, South African President Jacob Zuma has vowed to slash costs, get rid of state companies and make his government more friendly to business.

Mr. Zuma, struggling to avoid a credit-rating downgrade that could push South Africa into “junk” status this year, announced a series of sweeping reforms, including an urgent review of the country’s unique system of three capital cities, which he said was too expensive to maintain.

South Africa cannot afford a legislative capital in Cape Town and an executive capital in Pretoria, he told parliament in his state-of-the-nation speech on Thursday night. Top officials are obliged to have limousines and houses or hotel rooms in both cities, which was wasteful, he said. (The country also has a judicial capital in Bloemfontein, where its supreme court is based.)

Mr. Zuma is battling to survive a political and economic slump that threatens his grip on power. South Africa’s currency has collapsed, its economic growth has fallen below 1 per cent, its unemployment rate has climbed to 25 per cent and Mr. Zuma has been widely ridiculed for a series of corruption scandals and a bizarre decision to fire two finance ministers in four days.

Slumping in the opinion polls, Mr. Zuma was heckled and interrupted for nearly an hour in parliament before he was finally able to read his state-of-the-nation speech. Two opposition parties walked out of the parliamentary chamber in protest, with some MPs chanting that he must resign. Police, meanwhile, fired stun grenades to disperse crowds of demonstrators near the parliament building.

Mr. Zuma seemed unperturbed by the jeering, but he admitted that South Africa needs an economic overhaul. “Our country seems to be at risk of losing its investment-grade status from ratings agencies,” Mr. Zuma told parliament.

“If that happens, it will become more expensive for us to borrow money from abroad to finance our programs. … We all have a lot to do to turn the economy around and to cut wastage. We will go through a difficult period for a while, but when the economy recovers, we will be proud of ourselves for having done the right thing.”

He promised to cut back on expensive foreign trips by bloated government delegations, a long-standing source of grievance in the country. “Further restrictions on conferences, catering, entertainment and social functions will be instituted,” he added.

Mr. Zuma also announced a series of pro-business measures, including a cut in red tape for investors, an easing of restrictions on hiring foreign workers and reforms in South Africa’s state-owned enterprises, many of which are losing money and riddled with corruption. “Those companies that are no longer relevant to our development will be phased out,” he said.

Mr. Zuma did not explain why he had shocked the business community by firing two finance ministers in a four-day span in December, although MPs raised the question repeatedly in their interruptions of his speech.

Critics said he fired the first finance minister because he was resisting Mr. Zuma’s plans for big-spending projects in nuclear energy and the state airline. The dismissal led to heavy losses in South Africa’s stock markets and its currency. Four days later, in a bid to placate investors, he fired the new finance minister and replaced him with a former minister.

Despite the controversy over the nuclear-energy plan, which could cost up to $100-billion, Mr. Zuma said the government still plans to proceed with it.

“Let me emphasize that we will only procure nuclear on a scale and pace that our country can afford,” he said.

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